Nintendo woes

Video game gi­ant says the 3-D con­sole will miss the hol­i­day shop­ping sea­son.

Los Angeles Times - - Business - Ben Fritz

The video game gi­ant cuts its fore­cast for the year, cit­ing a de­lay of its 3DS con­sole.

Ja­panese video game gi­ant Nintendo Co. slashed its earn­ings fore­cast for the fis­cal year end­ing in March as it an­nounced that its highly an­tic­i­pated 3DS con­sole would miss the cru­cial hol­i­day shop­ping sea­son.

The dis­clo­sure that Nintendo, which has dom­i­nated the video game busi­ness in re­cent years, will miss its rev­enue and net in­come tar­gets is the lat­est bad news for an in­dus­try that has seen sales slump amid the eco­nomic slow­down.

Nintendo in par­tic­u­lar has been af­fected as sales of its Wii con­sole and games have slowed com­pared with the com­pet­ing Xbox 360 from Mi­crosoft and PlayS­ta­tion 3 from Sony.

The 3DS, a new ver­sion of the com­pany’s por­ta­ble game con­sole that dis­plays 3-D im­ages with­out glasses, is Nintendo’s next ma­jor ini­tia­tive ex­pected to boost sales. By missing the hol­i­day shop­ping sea­son, when game hard­ware tra­di­tion­ally launches, Nintendo prob­a­bly will de­press its sales prospects in the short term.

The 3DS will launch in Ja­pan in Fe­bru­ary. Nintendo didn’t an­nounce a re­lease date for the U.S. or Europe, but it had pre­vi­ously said it would hit all mar­kets by the end of March.

“The re­lease in Q4 has neg­a­tively im­pacted its fi­nan­cial out­look, as we had ex­pected a Q3 re­lease in Ja­pan,” Wed­bush Mor­gan an­a­lyst Michael Pachter said in a re­search note.

Nintendo dropped its sales fore­cast for the fis­cal year end­ing March 31 by 21% to $13.15 bil­lion. Net in­come is now pro­jected to be 55% lower than pre­vi­ously ex­pected at about $1.1bil­lion.

In ad­di­tion to the de­layed re­lease date for the 3DS, Nintendo blamed the ris­ing value of the yen and cur­rent sales trends. The com­pany re­duced sales fore­casts for its Wii and DS hard­ware and games for the con­soles.

Nintendo ex­pects to sell 4 mil­lion 3DS de­vices and 15 mil­lion 3DS games by the end of March.

An­a­lyst Colin Se­bas­tian at Lazard Cap­i­tal said 3-D ef­fects could help Nintendo’s new de­vice to stand out from the grow­ing num­ber of other de­vices that can play high-qual­ity games.

“As smart phones and con­nected tablets gain share in the ca­sual and hand-held game mar­ket, the 3DS will of­fer con­sumers a unique and dif­fer­en­ti­ated ex­pe­ri­ence com­bined with Nintendo’s his­tor­i­cally strong first-party soft­ware lineup,” he wrote in a note.

The 3DS will cost about $300 in Ja­pan. The orig­i­nal, non-3-D DS cost $150 when it was launched in 2004.

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